“Gita Gopinath, Harvard’s John Zwaanstra Professor of International Studies and of Economics, was appointed last month as economic counselor and director of research for the International Monetary Fund (IMF), becoming the chief economist of the powerful financial organization.

The role encompasses everything from helping determine financial assistance to countries to leading research by a vast department of economists. Gopinath’s appointment comes at an especially challenging time, as more countries are seeing a move away from globalization, and grappling with economic uncertainty. The Gazette caught up with Gopinath, who is also a faculty associate in the Weatherhead Center for International Affairs, to get her views on the biggest challenges facing the IMF today, what her priorities will be, and how she feels as the first woman in the job.

Q&A

GAZETTE: What was your reaction when you found out you were being offered this position?

GOPINATH: I was thrilled and honored. There were two rounds of interviews, but everything went very quickly. And I was very touched by the kind words of Managing Director Christine Lagarde and more generally by the reaction from family, friends, and colleagues to the announcement. My parents were flooded with congratulatory messages, which was a nice feeling. This is a very exciting job for me, given the areas that I work in as an international macroeconomist. There is really no other place in the world where I can work with such a large number of highly qualified international macroeconomists, and that is a great source of excitement for me. So I was very pleased, and very honored because I know that there were other good people who could have been given the job.

GAZETTE: Could you tell us a little bit about the role, and what your responsibilities will be?

GOPINATH: In terms of the job itself, there are two main parts. One is director of research, which oversees a department with about 100 economists who provide intellectual leadership on important policy questions. The questions range from if and how countries should manage international capital flows to how do we address growing inequality. The second part is serving as an economic counselor, giving advice to senior management of the fund on broad policy questions but also on providing financial assistance to countries. So there is always the question of how do you formulate a package to a given country? What kind of program do you design for them? I’m really looking forward to providing advice on those sorts of questions.

GAZETTE: What are some of the biggest issues IMF is facing right now?

GOPINATH: The one that is absolutely clear and present is that we are seeing the first serious retreat from globalization. This has not happened in the past 50 or 60 years, when the world moved toward lower tariffs and increasing trade across countries. Over the past several months, we have the U.S.-imposed tariffs and retaliation to them from China and other nations. There is in general growing uncertainty about trade policy, including with Brexit [the British move to leave the European Union]. While trade has reduced global poverty and raised livelihoods, its consequences for inequality, and on whether the rules of engagement are fair, are real concerns that need to be addressed.

There is also a concern about whether we have the right multilateral institutions and frameworks in place to make sure everybody feels that there is fairness in trade. And the same goes for capital flows. Foreign direct investment [FDI] was always viewed very favorably by countries. But because most FDI is now in tech-heavy firms, there are growing concerns about national security and international property theft. So I believe this retreat from globalization and this retreat from multilateralism is quite unique to the times we are living in.

Another important concern is the health of emerging markets as the U.S. continues to normalize its interest rates. Capital flows to several markets have reversed, putting pressure on their exchange rates and consequently on inflation, and on balance sheets, given that several emerging markets borrow heavily in dollars.

GAZETTE: Could you talk more about Brexit and the trend away from globalization? Do you see this trend as still being on the rise, or has it peaked already?

GOPINATH: I’d like to think we are at a peak right now, but we might stay there for a little while. How soon will things de-escalate? That is far from obvious. And that itself is a problem because large amounts of uncertainty do not help with economic growth. We have plenty of evidence that when you have uncertainty about policy, there are significant negative consequences. There is a genuine concern that, even if things de-escalate now, they can get bad again quickly in the future, so there is no point at which we can say we have a permanent resolution.

At this time a year ago, the world was actually in a very nice sweet spot. For the first time since the financial crisis, advanced markets, developing countries, and emerging markets were all growing and doing better than they had in the previous year. So the expectation was that 2018 would be a good year for the world economy. It is interesting to see how that changed so quickly over the last six months. We now have the phenomenon of a great divergence between the U.S., which has been growing fast, and the rest of the world. So while Europe seemed like it had recovered, things have been slowing down. Emerging markets have taken a big hit across the board — both oil-producing and oil-consuming countries have suffered. I believe we are looking at a period of sizable uncertainty and a period where the downside risks are significant.

GAZETTE: What do you think contributed to the shift away from a period of consistent growth in various markets to where we are now?

GOPINATH: A couple of things changed rather unexpectedly. Not many anticipated the severity of the trade conflicts in 2018. This has slowed growth in China, which, given its importance in world markets, has negatively impacted other countries. Secondly, commodity prices were expected to rise, but at a moderate pace. Geopolitical tensions in the world led to a sharp rise in commodity prices that was a negative shock for oil importers like India. The idiosyncratic problems in Argentina, Turkey, and Italy surfaced. What was expected was that the U.S. Fed would raise interest rates, and it has continued to do so in a predictable and gradual manner, but the new reality in terms of geopolitical tensions and escalation in trade conflicts has exacerbated the negative spillovers from these interest rate increases.”

Gita Gopinath, the John Zwaanstra Professor of International Studies and of Economics at Harvard University was recently appointed as Chief Economist with the International Monetary Fund, IMF. Here she is seen in her Littauer Building office. Kris Snibbe/Harvard Staff Photographer

“Gita Gopinath, Harvard’s John Zwaanstra Professor of International Studies and of Economics, was appointed last month as economic counselor and director of research for the International Monetary Fund (IMF), becoming the chief economist of the powerful financial organization.

The role encompasses everything from helping determine financial assistance to countries to leading research by a vast department of economists. Gopinath’s appointment comes at an especially challenging time,

“The death of T. N. Srinivasan, the iconoclast who laid the intellectual groundwork for India’s economic reforms, marks the end of an era

T.N. Srinivasan towered over the field of Indian economics like a colossus. His death in Chennai on Sunday truly marks the end of an era.

Srinivasan, or TN, as he was widely known, initially trained to be a statistician. He studied at the Indian Statistical Institute in Kolkata. An uninspiring stint in Mumbai, doing statistical quality control at the textile mills, led him to write to Tjalling Koopmans at Yale University.

Koopmans, who would later win the 1975 Nobel Prize in economics, took the young Indian under his wing. Under the master, Srinivasan studied operations research and linear programming, skills that were especially important in the age of national planning, when resources were sought to be optimally allocated with minimal recourse to the price system. Srinivasan wrote his doctoral thesis on the choice of techniques. Amartya Sen was grappling with the same issue at the same time at Cambridge University, under the guidance of Joan Robinson.

TN returned to India to join the Indian Statistical Institute in New Delhi in 1962. He also worked with the Planning Commission at a time when the government was brimming with young economics talent, including Srinivasan, Sen, Jagdish Bhagwati, V.K. Ramaswami, Pranab Bardhan and B.S. Minhas in New Delhi; and Deena Khatkhate, Anand Chandavarkar, V.V. Bhatt and M. Narasimham in Mumbai.

Srinivasan found himself doing work for the perspective planning division headed by the formidable Pitambar Pant. Its task was to assess the economic needs of the country over the 15 years from 1961 to 1976. One of the products of the division, with Srinivasan playing an active role, was on an issue that has become resonant in our times—basic minimum income for all Indians. Srinivasan and Bardhan would later write in 1974: “The stage has come when we should sharply focus our efforts on providing an assured minimum income to every citizen of the country within a reasonable period of time. Progressively this minimum itself should be raised as development goes apace.”

The next few decades would see Srinivasan write a series of technical papers on statistics, trade theory, economic development, agriculture and microeconomics. As the economist V.N. Balasubramanyam wrote in an introduction to an interview with Srinivasan, few scholars can list among their publications both A Note On Approximation To Finite Sample Moments Of Estimation Whose Exact Sampling Distribution is Unknown and Destitution: A Discourse. No wonder he was a fellow of both the Econometric Society and the American Philosophical Society.”

1. Western Countries Dominate Nobel Awards. […] a) the US and Canada (403 awards) and b) Western Europe (495 awards) together represent the vast majority of the 1,107 country affiliations associated with Nobel laureates, and more than 81% of the total number of laureates since 1901.

2. Top Ten Nobel-Winning Countries. […] The United States is by far the world’s leading country for receiving Nobel Prizes with an astonishing 377 individual laureates over the last 118 years (and 41.7% of all 904 awards), which is almost three times more than the second-highest ranked country — the United Kingdom, with 130 awards (see table above).

3. Latin America, Asia, Africa, and the Middle East together account for only 116 Nobel Prizes by country in total (10.5% of the 1,107 total), even though those areas together represent about 85% of the world’s population.

4. Asia. Laureates in Asia alone have been awarded 57 Nobel prizes, or 5.1% of the total prizes by country affiliation with nearly 55% of the world’s population. Nobel Prizes for Japanese laureates (28) represent close to half of all Asian awards, followed by India (1o) and China (8).

5. Middle East. Countries in the Middle East have received 22 Nobel Prizes, with more than half (12) of the awards going to Israeli laureates.

6. Africa is the region of the world with the fewest Nobel Prizes – only 17 in total, and only 7 outside of South Africa, even though Africa has a population of about 1 billion.

7. Jewish Nobel Laureates. Interestingly, Jews and people of Jewish descent represent less than 0.20% of the world’s population, but they represent more than 22% of all Nobel laureates (203 out of 904).

8. Nobel Laureates by Gender. Men have been awarded 847 Nobel Prizes compared to only 51 prizes awarded to female laureates.

9. Research Affiliations of Nobel Laureates. The table [below] shows the top ten research affiliations of Nobel laureates at the time of the announcement.

10. Nobel Prizes by Age. […] The chart below shows the age distribution of the 904 Nobel laureates, whose average age was 58.7 years old when the prize was awarded. By individual age, there are more laureates who received a Nobel Prize at age 61 or 63 years (33 individuals for each age) than any other age, followed by ages 56 years (32 laureates) and 60 years (31 laureates).

1. Western Countries Dominate Nobel Awards. […] a) the US and Canada (403 awards) and b) Western Europe (495 awards) together represent the vast majority of the 1,107 country affiliations associated with Nobel laureates, and more than 81% of the total number of laureates since 1901.

Deena Khatkhate, who raised the quality of economic discourse through his work at the Reserve Bank of India and the IMF and his editorship of World Development, has passed away. A review of one of his books by Charles Collyns and myself gives a flavor of Deena’s intellectual contributions and independence of mind.

**

“Life is lived forwards but understood backwards,” wrote the philosopher Kierkegaard. This collection of a life-time’s work of the Indian economist Deena Khatkhate can be understood as an act of rebellion against much of his intellectual inheritance: socialism and central planning, Keynesian macroeconomics, and an adversarial view of North-South relationships. Instead, these essays put forward a spirited (but not uncritical) defense of capitalism and markets, espouse a macroeconomics as much Friedmanite as Keynesian, and urge a constructive approach to relationships between developing and advanced nations.

The last of these themes is illustrated in arguably the best article in the collection, which is on the brain drain—the emigration of skilled workers from developing to advanced countries. In this article, published in F&D in 1971, Khatkhate challenged the prevalent view of the brain drain as an evil, a form of aid from the poor to the rich. He showed that because most emigration occurred from developing countries with a clear excess supply of skilled workers, it was actually a social safety valve for the poor countries. And because it encouraged the “cross fertilization of ideas” between skilled workers from the poor nations and the richer nations, the brain drain could be “a desirable investment.”

There are examples of this prediction coming to pass, such as the success of software exports from countries like India, Ireland, and Israel to more advanced nations. Ashish Arora, a professor at Carnegie Mellon University, has shown that this success is due in part to “the reserve army of underemployed engineers and scientists in these countries [that] had previously migrated to the United States and the United Kingdom.” Through their work abroad, this diaspora gained experience with the business practices of their future customers—an earlier brain drain had turned into a brain gain, as Khatkhate predicted.

Other essays on North-South relationships in the book include one on “conflict and cooperation in the inter- national monetary system.” Written in 1987, it anticipates many reforms of the IMF and other international agencies—such as giving “greater voice” to the South in decision making—that have taken place or have come to the front of the agenda. To be sure, Khatkhate was one of many making similar suggestions. But, as he notes in the preface, he “received some flak” for this article since he was employed at the IMF at the time. In any event, Khatkhate soon left the IMF, after two decades of service, and went on to become editor of World Development, a scholarly journal.

Prior to joining the IMF, Khatkhate worked for over a decade—from 1955 to 1968—at the Reserve Bank of India, the country’s central bank. Not surprisingly, therefore, a second major theme of the essays is the role of macroeconomic and financial policies in promoting economic growth. In the 1950s, the Keynesian view advocated running fiscal deficits to promote growth in developing countries. The rationale was that since there were underemployed resources in these economies, heavy government spending could lead to employment of those resources without triggering inflation. However, Khatkhate writes that the negative evidence on the actual impact of government spending convinced him that “all that happened as a result of heavy resort to fiscal deficit was inflation, decline in income, saving and investment.” Khatkhate’s views on monetary policy also differed from the 1960s Keynesian view, emphasizing as they did the need for rules to guide the central bank rather than give it too much discretion.

A third theme is the rhetoric vs. the reality of socialism and central planning. Khatkhate blamed socialism for trying to deliver both growth and equity and delivering neither. The real problem in developing countries, he said, was not so much the skewed income distribution but “improving the standard of the whole mass of people, which is possible only with rapid economic growth.” These views were far from the mainstream when Khatkhate wrote them in 1978. He is not, however, an unvarying defender of capitalism and free markets. On the free mobility of capital, for instance, his views are close to that of his compatriot Jagdish Bhagwati in favoring a cautious approach, given the evidence that hasty liberalization can contribute to financial crises.

Deena Khatkhate, who raised the quality of economic discourse through his work at the Reserve Bank of India and the IMF and his editorship of World Development, has passed away. A review of one of his books by Charles Collyns and myself gives a flavor of Deena’s intellectual contributions and independence of mind.

**

“Life is lived forwards but understood backwards,” wrote the philosopher Kierkegaard. This collection of a life-time’s work of the Indian economist Deena Khatkhate can be understood as an act of rebellion against much of his intellectual inheritance: socialism and central planning,

“An important event takes place this week that is recognized annually on CD. Tuesday, July 31 is Milton Friedman’s birthday — he was born on that day in 1912 and would have been 106 years old this year. Unfortunately, Milton died on November 16, 2006, when he was 94 years old. In an editorial in the Wall Street Journal following Professor Friedman’s death, they reported his loss with the same tribute Milton used when Ronald Reagan died, saying “few people in human history have contributed more to the achievement of human freedom.” In honor of his legacy and birthday, here are 20 of my favorite Milton Friedman quotes, along with a bonus video and some special birthday graphics:

1. There is nothing as permanent as a temporary government program.

2. Many well-meaning people favor legal minimum-wage rates in the mistaken belief that they help the poor. These people confuse wage rates with wage income. It has always been a mystery to me to understand why a youngster is better off unemployed at $15 an hour than employed at $7.25 (updated). The rise in the legal minimum-wage rate is a monument to the power of superficial thinking.

3. First of all, the government doesn’t have any responsibility to the poor. People have responsibility. This building doesn’t have responsibility. You and I have responsibility. People have responsibility. Second, the question is how can we as people exercise our responsibility to our fellow man most effectively? That’s the problem. So far as poverty is concerned, there has never been a more effective machine for eliminating poverty than the free enterprise system and the free market. The period in which you had the greatest improvement in the lot of the ordinary man was the period of the 19th and early 20th century.

4. In the international trade area, the language is almost always about how we must export, and what’s really good is an industry that produces exports, and if we buy from abroad and import, that’s bad. But surely that’s upside-down. What we send abroad, we can’t eat, we can’t wear, we can’t use for our houses. On the other hand, the goods and services we import, they provide us with TV sets we can watch, with automobiles we can drive, with all sorts of nice things for us to use.”

“An important event takes place this week that is recognized annually on CD. Tuesday, July 31 is Milton Friedman’s birthday — he was born on that day in 1912 and would have been 106 years old this year. Unfortunately, Milton died on November 16, 2006, when he was 94 years old. In an editorial in the Wall Street Journal following Professor Friedman’s death,